Capital Budgeting Flynn Corporation Is Debating Whether to Purchase a New Computerized

question 42

Essay

Capital budgeting
Flynn Corporation is debating whether to purchase a new computerized production system.The system will cost $450,000,and have an estimated 10-year life with a salvage value of $70,000.The estimated operating results from the new production system are as follows: All revenue and expenses other than depreciation will be received and paid in cash.Compute the following for this proposal: (rounded)
(a)Annual net cash flow: $________
(b)Payback period: ________
(c)Return on average investment: ________
(d)Net present value,discounted at an annual rate of 6%: (The present value of $1 due in 10 years,discounted at 6%,is 0.558;present value of $1 received annually for 10 years,discounted at 6%,is 7.360. ): $________

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